Jam London Now Becomes the NAV ETF Standard, Is This a Wise Decision?

Eric Balchunas, senior ETF analyst at Bloomberg Intelligence, recently sparked a major debate about the Net Asset Value (NAV) calculation for ETFs that uses London time as the reference point. Through a post on X platform, he highlighted a systemic anomaly that has long been overlooked by the market but actually has significant impacts on global investors.

Why Was London Closing Time Chosen as the Standard?

London closing time has now been established as the reference time for calculating ETF NAVs. This timing aligns with the London stock exchange’s close, which coincides with midday in the United States. This mechanism was originally intended to balance access between European and American markets, but in practice, it creates a significant time mismatch. Although this decision appears technical, it has real consequences for trading operations and ETF pricing.

Impact on Cross-Time Zone Investors

The effects of this London time standard are not uniform for all investors. Investors in Asia face unique challenges because NAV calculations occur in the middle of the night local time, creating a significant information lag. Meanwhile, investors in the US and Europe have relatively more synchronized access with their market hours. This disparity in access has sparked ongoing discussions about fairness and market efficiency, especially as more global investors participate in the modern ETF ecosystem.

Ongoing Industry Controversy

Some market observers have described the current London time setting as an “illogical” system for the 24/7 market era. The financial community continues to question whether such NAV calculation procedures remain relevant given current technology and market dynamics. The long-term implications for investor decisions and trading operations remain a key focus of industry discussions, while regulators and ETF providers continue to evaluate the need for reforming this calculation system.